Court of Justice of the European Communities (including Court of First Instance Decisions)

(Failure of a Member State to fulfil obligations Directive 2004/18/EC Procedures for the award of public contracts National legislation providing for a single procedure for the award of the contract defining needs and of the ensuing marché d'exécution Compatibility with that directive)

In Case C-299/08,

ACTION under Article 226 EC for failure to fulfil obligations, brought on 4 July 2008,

European Commission, represented initially by D. Kukovec and G. Rozet, and subsequently by G. Rozet and M. Konstantinidis, acting as Agents, with an address for service in Luxembourg,

applicant,

French Republic, represented by G. de Bergues, J.'C. Gracia and J.'S. Pilczer, acting as Agents,

defendant,

composed of J.N. Cunha Rodrigues (Rapporteur), President of the Second Chamber, acting as President of the Third Chamber, P. Lindh, A. Rosas, U. Lõhmus and A. Arabadjiev, Judges,

Advocate General: J. Mazák,

Registrar: R. Şereş, Administrator,

having regard to the written procedure and further to the hearing on 10 June 2009,

after hearing the Opinion of the Advocate General at the sitting on 22 September 2009,

gives the following

1. By its application, the Commission of the European Communities is asking the Court to declare that, by adopting and keeping in force Articles 73 and 74-IV of the Code des marchés publics (the Public Procurement Code) adopted by Decree No 2006-975 of 1 August 2006 (Official Journal of the French Republic of 4 August 2006, p. 11627), inasmuch as those provisions lay down a procedure for the award of so'called marchés de definition (public contracts for designing the parameters, including the purpose, of a public works, supply or service contract) under which it is possible for the contracting authority to award a marché d'exécution (a public works, supply or service contract) to one of the holders of the initial marchés de définition without opening it afresh to competition or, at most, by opening it to competition limited to those holders, the French Republic has failed to fulfil its obligations under Articles 2, 28 and 31 of Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts (OJ 2004 L 134, p. 114).

Legal context

Community legislation

2. Recital 3 in the preamble to Directive 2004/18 states:

'Such [Community] coordinating provisions [of national procedures for the award of contracts] should comply as far as possible with current procedures and practices in each of the Member States.'

3. Article 2 of the Directive provides:

'Contracting authorities shall treat economic operators equally and non'discriminatorily and shall act in a transparent way.'

4. According to Article 28 of the Directive:

'In awarding their public contracts, contracting authorities shall apply the national procedures adjusted for the purposes of this Directive.

They shall award these public contracts by applying the open or restricted procedure. In the specific circumstances expressly provided for in Article 29, contracting authorities may award their public contracts by means of the competitive dialogue. In the specific cases and circumstances referred to expressly in Articles 30 and 31, they may apply a negotiated procedure, with or without publication of the contract notice.'

5. Article 29 of Directive 2004/18, entitled 'Competitive dialogue', provides:

'1. In the case of particularly complex contracts, Member States may provide that where contracting authorities consider that the use of the open or restricted procedure will not allow the award of the contract, the latter may make use of the competitive dialogue in accordance with this Article.

A public contract shall be awarded on the sole basis of the award criterion for the most economically advantageous tender.

2. Contracting authorities shall publish a contract notice setting out their needs and requirements, which they shall define in that notice and/or in a descriptive document.

3. Contracting authorities shall open, with the candidates selected in accordance with the relevant provisions of Articles 44 to 52, a dialogue the aim of which shall be to identify and define the means best suited to satisfying their needs. They may discuss all aspects of the contract with the chosen candidates during this dialogue.

During the dialogue, contracting authorities shall ensure equality of treatment among all tenderers. In particular, they shall not provide information in a discriminatory manner which may give some tenderers an advantage over others.

Contracting authorities may not reveal to the other participants solutions proposed or other confidential information communicated by a candidate participating in the dialogue without his/her agreement.

4. Contracting authorities may provide for the procedure to take place in successive stages in order to reduce the number of solutions to be discussed during the dialogue stage by applying the award criteria in the contract notice or the descriptive document. The contract notice or the descriptive document shall indicate that recourse may be had to this option.

5. The contracting authority shall continue such dialogue until it can identify the solution or solutions, if necessary after comparing them, which are capable of meeting its needs.

6. Having declared that the dialogue is concluded and having so informed the participants, contracting authorities shall ask them to submit their final tenders on the basis of the solution or solutions presented and specified during the dialogue. These tenders shall contain all the elements required and necessary for the performance of the project.

These tenders may be clarified, specified and fine-tuned at the request of the contracting authority. However, such clarification, specification, fine-tuning or additional information may not involve changes to the basic features of the tender or the call for tender, variations in which are likely to distort competition or have a discriminatory effect.

7. Contracting authorities shall assess the tenders received on the basis of the award criteria laid down in the contract notice or the descriptive document and shall choose the most economically advantageous tender in accordance with Article 53.

At the request of the contracting authority, the tenderer identified as having submitted the most economically advantageous tender may be asked to clarify aspects of the tender or confirm commitments contained in the tender provided this does not have the effect of modifying substantial aspects of the tender or of the call for tender and does not risk distorting competition or causing discrimination.

8. The contracting authorities may specify prices or payments to the participants in the dialogue.'

6. Article 31 of Directive 2004/18 states:

'Contracting authorities may award public contracts by a negotiated procedure without prior publication of a contract notice in the following cases:

...

(3) for public service contracts, when the contract concerned follows a design contest and must, under the applicable rules, be awarded to the successful candidate or to one of the successful candidates[;] in the latter case, all successful candidates must be invited to participate in the negotiations;

...'

7. The first subparagraph of Article 80(1) of the Directive is worded as follows:

'The Member States shall bring into force the laws, regulations and administrative provisions necessary to comply with this Directive no later than 31 January 2006. They shall forthwith inform the Commission thereof.'

National legislation

8. The code des marchés publics (Public Procurement Code), in the version thereof resulting from Decree No 2004-15 of 7 January 2004 (Official Journal of the French Republic of 8 January 2004, p. 703), which entered into force on 10 January 2004, provided in the third paragraph of Article 73 as follows:

'Provisions supplied under several marchés de définitions having the same subject'matter, concluded upon completion of a single procedure and awarded simultaneously, may be awarded, without a further tendering process, to the supplier of the chosen solution. In such cases, the amount of the provisions to be compared with the thresholds takes account of the cost of the definition studies and the estimated amount of the marché d'exécution.'

9. The Public Procurement Code, as adopted by Decree No 2006'975, which entered into force on 1 September 2006, contains inter alia the following provisions:

'Article 73

If the public entity is unable to specify the aims and performances which the contract must meet, the techniques to be used, and the human and material resources required, it may resort to marchés de definition.

The purpose of such contracts is to explore the possibilities and conditions for establishing a contract subsequently, if necessary through production of a model or demonstrator. They must also enable the price level of the provisions to be estimated and calculated, as well as the different phases of the performance schedule.

In the framework of a single procedure, contracts for the performance of services following several marchés de définition having the same subject-matter and awarded simultaneously are awarded after being opened to competition limited to the holders of the initial marchés de définition, in accordance with the following provisions:

1. The public contract notice defines the subject-matter of the marchés de définition awarded simultaneously and the subject-matter of the subsequent marché d'exécution;

2. The public contract notice defines the criteria for the selection of applications. Those criteria take into account the capacities and competences required of the candidates both for the marchés de définition and for the subsequent marché d'exécution;

3. The public contract notice defines the criteria for the selection of offers for the marchés de définition awarded simultaneously and the criteria for the selection of offers for the subsequent marché d'exécution;

4. The amount of the provisions to be compared with the thresholds takes account of the cost of the definition studies and the estimated amount of the marché d'exécution;

5. The number of marchés de définition awarded simultaneously in the framework of the present procedure may not be lower than three, subject to a sufficient number of candidates.

The contract or framework agreement is awarded by the tenders committee for the local authorities or after the opinion of the tenders committee for the State, for the public health bodies and the public social or medical-social bodies.'

Article 74

...

IV. In the framework of a single procedure, the contract or framework agreement of project-management following several marchés de définition having the same subject-matter and awarded simultaneously may be awarded after being opened to competition limited to the holders of the initial marchés de définition, under the conditions laid down in the third paragraph of Article 73.

...'

The pre'litigation procedure

10. By letter of 18 October 2004, the Commission sent the French Republic a first letter of formal notice concerning Articles 73 and 74'III of the Public Procurement Code, as amended by Decree No 2004-15. Following the amendment of those provisions by Decree No 2006-975, the Commission sent an additional letter of formal notice to that Member State on 15 December 2006.
11. As it was not satisfied with the French Republic's replies, on 29 June 2007 the Commission sent a reasoned opinion to the French Republic, calling on it to take the measures necessary to comply with that opinion within two months of its receipt.
12. Taking the view that that Member State's replies to the reasoned opinion were not satisfactory, the Commission decided to bring the present action.

The action

Arguments of the parties

13. The Commission claims that Articles 73 and 74-IV of the Public Procurement Code, as adopted by Decree No 2006-975, allow a contracting authority to award a marché d'exécution (a public works, supply or service contract) to one of the holders of the initial marchés de définition without opening it afresh to competition or, at most, by opening it to competition limited to those holders as soon as the conditions provided for in the third paragraph of Article 73 have been met. Those articles of the Public Procurement Code infringe the provisions of Directive 2004/18 by allowing a contract to be awarded on the basis of mutual agreement, or with limited competition, in situations not provided for by the Directive.
14. The Commission maintains that marchés de définition as provided for by those national provisions do not make it possible, as a general rule, to establish at the outset, with sufficient precision, the subject-matter of the marché d'exécution, the criteria for selecting tenderers or those for awarding the contract in question. It follows that the procedure for the award of marchés de définition resulting from those provisions runs counter to the principle of transparency laid down in Article 2 of Directive 2004/18. That procedure creates a situation of legal uncertainty for both contracting authorities and operators.
15. According to the Commission, the procedure for the award of marchés de définition is neither a competitive dialogue nor a framework agreement within the meaning of Articles 29 and 32 of Directive 2004/18. Nor is such a procedure a design contest under which it is possible, under certain conditions, to award the ensuing service contract on the basis of mutual agreement in accordance with Article 31(3) of the Directive.
16. The French Republic claims that the national provisions in issue are not incompatible with Articles 2, 28 or 31 of Directive 2004/18. The latter, it argues, is a coordinating directive and does not lay down a uniform and exhaustive body of Community rules. Consequently, the fact that competition may be limited when the marchés d'exécution are being awarded is compatible with that directive. The procedure for the award of marchés de définition complies with the principles on the right of establishment and the freedom to provide services laid down by the EC Treaty and set out in Article 2 of that directive, since the Member States remain free to maintain or adopt substantive and procedural rules in regard to public contracts.
17. The French Republic argues that it is possible for the subject-matter and criteria of the subsequent marché d'exécution to be established from the launch of the procedure for the award of the marchés de définition. There are many situations, such as those involving certain urban development contracts, in which the subject-matter and criteria for the award of the marché d'exécution are sufficiently independent of the marchés de définition that they can already be determined at the initial stage of the marchés de définition.
18. The French Republic adds that Directive 2004/18 sets out two procedures with characteristics which are analogous to those of the procedure for the award of marchés de definition provided for by the Public Procurement Code, as adopted by Decree No 2006'975, namely the framework agreement and the competitive dialogue. By those two procedures, the Community legislature itself established complex procedures by which contracts are opened to competition in two stages. Since that directive does not lay down a uniform and exhaustive body of Community rules, the national legislature can also establish specific provisions providing for contracts to be opened to competition in two stages, provided that those provisions comply with the principle of transparency laid down in Article 2 of that directive.
19. If the Court were to take the view that the body of rules established by that directive is exhaustive, the French Republic submits, in the alternative, that the procedure for the award of marchés de definition set out in the Public Procurement Code can be regarded as constituting a variation on the competitive dialogue procedure.

Findings of the Court

20. By its form of order, the Commission is asking the Court to declare that the French Republic has failed to fulfil its obligations under Articles 2, 28 and 31 of Directive 2004/18 by adopting and keeping in force Articles 73 and 74-IV of the Public Procurement Code adopted by Decree No 2006-975, inasmuch as those provisions lay down a procedure for the award of marchés de definition under which it is possible for a contracting authority to award a marché d'exécution to one of the holders of the initial marchés de définition 'without opening it afresh to competition' or, at most, by opening it to competition limited to those holders.
21. It is appropriate to examine the alleged failure to fulfil obligations under Article 31 of Directive 2004/18. According to the Commission, that failure stems from the fact that the procedure for the award of marchés de définition allows contracts to be awarded on the basis of mutual agreement in circumstances which are not provided for by point 3 of Article 31 of the Directive.
22. In this respect, it is settled case'law that the question whether a Member State has failed to fulfil obligations must be determined by reference to the situation prevailing in that Member State at the end of the period laid down in the reasoned opinion (see, inter alia, Case C-64/01 Commission v Greece [2002] ECR I-2523, paragraph 7, and Case C-456/05 Commission v Germany [2007] ECR I-10517, paragraph 15).
23. It is common ground that the version of Article 73 of the Public Procurement Code resulting from Decree No 2004-15 which allowed marchés d'exécution to be awarded 'without a further tendering process' was no longer in force on the date of expiry of the two-month period laid down in the reasoned opinion. On that date, that version of Article 73 had been replaced by a new version resulting from Decree No 2006'975.
24. It is clear from the wording of the third paragraph of Article 73 of the Public Procurement Code, as adopted by Decree No 2006-975, that marchés d'exécution are awarded solely 'after being opened to competition limited to the holders of the initial marchés de définition'. On the date on which the period laid down in the reasoned opinion expired, marchés d'exécution were thus not awarded by means of the negotiated procedure within the meaning of point 3 of Article 31 of Directive 2004/18.
25. It follows that the Commission's action must be dismissed in so far as it seeks a declaration by the Court that the procedure for the award of marchés de définition allows a contracting authority to award a marché d'exécution to one of the holders of the marchés de définition 'without opening it afresh to competition' and in so far as it claims that there has been a failure to fulfil obligations under Article 31 of that directive.
26. The action does, however, retain a purpose in so far as the Commission complains that the French Republic has failed in its obligations under Articles 2 and 28 of Directive 2004/18 by adopting and keeping in force Articles 73 and 74-IV of the Public Procurement Code adopted by Decree No 2006-975, inasmuch as those provisions lay down a procedure for the award of marchés de definition under which it is possible for the contracting authority to award a marché d'exécution to one of the holders of the initial marchés de définition by opening it to competition limited to those holders.
27. In its statement in defence, the French Republic submits that Directive 2004/18 is only a coordinating directive, which leaves Member States free to maintain or adopt rules in regard to public contracts other than those provided for by that directive.
28. That line of argument cannot be accepted. Whilst it is true that Directive 2004/18 does not seek to establish complete harmonisation of the rules governing public procurement in the Member States, the fact remains that the procedures for the award of public contracts that the Member States are permitted to use are listed exhaustively in Article 28 of that directive.
29. Under Article 28, contracting authorities are required to award their public contracts by applying either the open or restricted procedure, or, in the specific circumstances expressly provided for in Article 29 of Directive 2004/18, the competitive dialogue or, in the further alternative, in the specific circumstances referred to expressly in Articles 30 and 31 thereof, a negotiated procedure. The award of public contracts by means of other procedures is not permitted by that directive.
30. A different conclusion cannot be inferred from Joined Cases 27/86 to 29/86 CEI and Bellini [1987] ECR 3347.
31. Admittedly, in the first sentence of paragraph 15 of that judgment, the Court held that Council Directive 71/305/EEC of 26 July 1971 concerning the coordination of procedures for the award of public works contracts (OJ, English Special Edition 1971 (II), p. 682) did not lay down a uniform and exhaustive body of Community rules. However, in the following sentence of that paragraph 15, the Court stated that, although Member States remained free to maintain or adopt substantive and procedural rules in regard to public contracts, they had to do so within the framework of the common rules contained in that directive.
32. Furthermore, in paragraph 17 of CEI and Bellini, the Court made it clear that it was ruling in the light of the state of harmonisation of Community law at the time of delivery of its judgment. However, the second paragraph of Article 28 of Directive 2004/18, which had no equivalent in Directive 71/305, specifically lists the procedures which contracting authorities must apply in awarding their contracts.
33. It follows that, in the framework of the common rules currently in force, Member States are no longer free to adopt award procedures other than those specified by Directive 2004/18.
34. Accordingly, the French Republic's arguments that it is possible for a Member State to adopt contract award procedures which are not provided for by Directive 2004/18, but which exhibit characteristics analogous to those of certain procedures referred to by that directive, must be rejected.
35. However, it is necessary to examine the argument, put forward by the French Republic in the alternative, that the procedure for the award of marchés de definition provided for by the Public Procurement Code, as adopted by Decree No 2006'975, constitutes a form of implementation of the competitive dialogue procedure provided for in Article 29 of Directive 2004/18.
36. It must be acknowledged that there is a degree of proximity between the objectives pursued by the competitive dialogue procedure and those of the procedure for the award of marchés de definition. Each of those procedures was designed to enable the contracting authority to define initially the specific subject'matter of a contract and the technical means for performing it.
37. However, there is a fundamental difference between those two procedures. The difference is that the competitive dialogue is a procedure for the award of one single contract, whereas the procedure for the award of marchés de définition relates to the award of several contracts of different natures, namely marchés de définition, on the one hand, and one or more marché d'exécution, on the other.
38. That difference by itself makes it impossible for the procedure for the award of marchés de definition to be interpreted as a form of implementation of the competitive dialogue procedure.
39. The Commission also pleads a failure to fulfil obligations under Article 2 of Directive 2004/18, which requires contracting authorities to treat economic operators equally and non'discriminatorily and to act in a transparent way.
40. In this respect, the Court notes that the purpose of the procedure for the award of marchés de definition, as adopted by Decree No 2006-975, is to award two types of contracts, namely marchés de définition and marchés d'exécution, the latter being awarded after being opened to competition limited to the holders of the former alone. Accordingly, economic operators who might be interested in participating in marchés d'exécution, but who are not holders of one of the marchés de définition, are discriminated against in comparison with those holders, contrary to the principle of equality, which is laid down as a principle for the award of contracts in Article 2 of Directive 2004/18.
41. Moreover, both the principle of equal treatment and the obligation of transparency which flows from it require the subject-matter of each contract and the criteria governing its award to be clearly defined (see, to that effect, Case C-340/02 Commission v France [2004] ECR I-9845, paragraph 34).
42. The French Republic has put forward a number of examples of procedures for the award of marchés de definition in which, in its view, the subject'matter of the marché d'exécution could be defined with a certain degree of precision already at the stage of the launch of the procedure for the award of the marchés de définition.
43. However, marchés de définition and marchés d'exécution appear by their nature to have different subject'matters, namely, first, a study and design project in which the needs of the contracting authority are defined and, second, the actual provision of supplies, services or works defined in advance. The national provisions the subject of complaint are not, however, capable of ensuring that, in all cases, the subject'matter and award criteria of both marchés de définition and the marché d'exécution can be defined from the beginning of the procedure.
44. It follows that the procedure for the award of marchés de définition laid down by Articles 73 and 74-IV of the Public Procurement Code, as adopted by Decree No 2006-975, is not consistent with Article 2 of Directive 2004/18.
45. Consequently, by adopting and keeping in force Articles 73 and 74-IV of the Public Procurement Code, adopted by Decree No 2006-975 of 1 August 2006, inasmuch as those provisions lay down a procedure for the award of marchés de definition under which it is possible for the contracting authority to award a marché d'exécution (a public works, supply or service contract) to one of the holders of the initial marchés de définition by opening it to competition limited to those holders, the French Republic has failed to fulfil its obligations under Articles 2 and 28 of Directive 2004/18.

Costs

46. Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party's pleadings. Since the Commission has applied for costs to be awarded against the French Republic and the latter has, in essence, been unsuccessful, the French Republic must be ordered to pay the costs.

On those grounds, the Court (Third Chamber) hereby:

1. Declares that, by adopting and keeping in force Articles 73 and 74-IV of the Public Procurement Code, adopted by Decree No 2006-975 of 1 August 2006, inasmuch as those provisions lay down a procedure for the award of marchés de definition (public contracts for designing the parameters, including the purpose, of a public works, supply or service contract) under which it is possible for the contracting authority to award a marché d'exécution (a public works, supply or service contract) to one of the holders of the initial marchés de définition by opening it to competition limited to those holders, the French Republic has failed to fulfil its obligations under Articles 2 and 28 of Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts;

2. Dismisses the remainder of the action;

3. Orders the French Republic to pay the costs.

[Signatures]

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* Language of the case: French.